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Deposit account - Quiz
Contributed by: Morris
  • 1. What is the nature of the relationship between a bank and a depositor?
A) Employer-employee
B) Debtor-creditor
C) Shareholder-corporation
D) Partnership
  • 2. How is a customer's deposit recorded on a bank's balance sheet?
A) As a liability
B) As an asset
C) As revenue
D) As equity
  • 3. What happens to the legal title of cash when a customer deposits it into an account?
A) It is held by a third-party trustee
B) The customer retains it
C) The customer surrenders it to the bank
D) It remains with the central bank
  • 4. What is the process called where banks lend out most of the money deposited by customers?
A) Direct lending
B) Central banking
C) Full-reserve banking
D) Fractional-reserve banking
  • 5. What is the primary way banks avoid using physical cash for payments?
A) Transferring ownership of deposits
B) Increasing interest rates
C) Printing more currency
D) Selling bank assets
  • 6. Which of the following is considered an asset of a bank?
A) The cash received from a deposit
B) Customer withdrawal rights
C) The deposit liability
D) The interest owed to customers
  • 7. What does the term 'withdraw' mean in the context of banking?
A) Taking money out of an account
B) Transferring funds between banks
C) Paying money into an account
D) Borrowing funds from a lender
  • 8. What do commercial banks create when they issue a loan by depositing proceeds into a checking account?
A) Physical banknotes
B) Central bank reserves
C) Legal tender
D) Economic money
  • 9. What determines the methods a customer uses to move money into or out of an account?
A) The type of currency used
B) The central bank's policy
C) The terms and conditions of the account
D) The bank's physical location
  • 10. On the bank's books, when $100 is deposited, what is debited?
A) The cash account
B) The interest expense account
C) The deposits liability account
D) The equity account
  • 11. Which types of accounts are specifically mentioned as examples of deposit accounts?
A) Credit and loan accounts
B) Tax and retirement accounts
C) Investment and brokerage accounts
D) Savings and current accounts
  • 12. What does the account balance represent from the bank's perspective?
A) An amount owed by the bank to the customer
B) The physical cash stored in the vault
C) An amount owed by the customer to the bank
D) The total profit earned by the bank
  • 13. What allows banks to pay interest on deposits?
A) Printing new banknotes
B) Charging customers for every transaction
C) Earning interest on assets from lending
D) Investing in the stock market
  • 14. In financial statements, the noun 'deposit' describes what?
A) The operational cost of the bank
B) The liability owed by the bank
C) The profit made on loans
D) The physical funds held by the bank
  • 15. How do banks effectively increase the money supply?
A) By physically printing more currency
B) By recording loans as deposit liabilities
C) By restricting withdrawals
D) By reducing the interest paid on savings
  • 16. Besides deposit insurance, what else may protect bank deposits?
A) Customer loyalty programs
B) Corporate tax breaks
C) Government guarantee scheme
D) Internal bank audits
  • 17. Which of the following is an example of a statutory regulation mentioned in the text?
A) Marketing guidelines
B) Reserve requirements
C) Customer service standards
D) Office hour regulations
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